1. Field of the Invention
One of the aspects of the present invention relates generally to a method and system for global purchasing and, more specifically, a method and system for global purchasing that includes using blanket purchase agreements.
2. Background Art
Distributed enterprises are organizations that have multiple operating units (OUs) spread across geographical regions, including continents and the entire world. In the existing business environment, many businesses have operating facilities located in multiple countries and continents. For example, an automobile manufacturer can have multiple management facilities, engineering facilities, manufacturing facilities, assembly facilities, distribution facilities, sales facilities and service facilities located within several countries and continents. These facilities commonly deal with a second-tier of equally-distributed supplier communities.
In distributed enterprises, procurement can be divided into two main categories: direct and indirect. Direct materials procurement includes the purchasing of resources that make up the product ultimately being manufactured. Indirect procurement includes the purchasing of “support” resources that are necessary to bring about the manufacture of the product. Direct material buyers are generally responsible for procuring the direct materials for production plants, otherwise referred to as ship-to locations, from suppliers that may have different supplier sites, otherwise referred to as ship-from locations, on the same blanket purchasing agreement (BPA). Indirect material buyers generally have the same responsibility with respect to procuring non-production materials. Consequently, direct and indirect material buyers typically negotiate global BPAs. In some instances, the buyer is responsible for buying materials for several ship-to locations that could span across multiple legal entities, such as national companies or OUs, located in one or more countries.
The negotiation of global BPAs present unique complications for buyers. In some of these circumstances, material price could vary by plant and within the same plant and material prices can also vary by dates depending on the “effective dates” for the price of the materials. Additionally, buyers are not usually aware of the exact material quantities to be bought or their delivery schedules. This information may be available once a production plan is finalized. Consequently, buyers can only set up a BPA with suppliers as to supply terms, with exact order being given at a later time.
Conventional global purchasing management software does not address these complications. For example, blanket order and blanket release functionality in Oracle applications have the following limitations: each blanket order can be created for only one supplier and one supplier site, a blanket order release has no supplier or supplier site specification and can only be created for the supplier and supplier site on blanket order agreement, a blanket order can only have one ship to location, blanket orders are not renewable automatically, blanket orders are restricted to only one operating unit, and blanket orders do not have a maximum release value which can automatically route them to a buyer for intervention.
Conventional systems prevent buyers from negotiating global BPAs. As a result, a buyer responsible for a specific part across OUs commonly creates and maintains several BPAs in each of the OUs. The creation of several different global BPAs is not feasible since it is overly burdensome to maintain such a system.
A method and system is needed in which the buyer has the ability to buy products and services for both manufacturing and non-manufacturing locations across legal entities. Buyers should be able to buy globally without having to switch operating units within purchasing management software.